In 2018 I bought a 3-family building in Cambridge that had a lot of problems. It was initially on the market for 1.8 million and didn’t sell for several months. I was able to negotiate the price down and get the home under agreement for 1.6 million.
This building had a lot of structural problems and serious issues with the brick exterior. Bricks are bound together by mortars which calcify over time. When you own a brick building, the bricks need to be professionally repointed every 20-30 years to make sure the mortars are stable. In this case, the bricks hadn’t been repointed for over 100 years and had serious deferred maintenance. Many buyers were scared to buy this home because some of the exterior walls looked like they were falling down. I found several professional masons to evaluate the issues and most of them provided quotes ranging from 100k to 250k to fix these issues. After studying the compositions of the mortars and the condition of the building, I was able to order the right materials and worked a contractor I had a relationship with who got it all done for 10k. I hired 2 different structural engineers to evaluate the building and make sure there were no structural issues when the work was done.
To this day, this building has not had any structural issues, and I was able to get this home for 200k below the initial list price back in 2018! The building was re-appraised at 1.95 mil the following year when I tried to refinance the home to get a lower interest rate. Rents increased by 46% after the improvements i did in the building. I was able to create thousands of dollars more profit every month by lowering my mortgage payments and increasing the rents, and refinancing later to buy more properties!
This is an example of how we can create value in real estate.